News

March 1, 2015 Capital Insights: Capitalizing Value-Add and Core-Plus Acquisitions

In recent months Dekel Capital has been actively arranging high-leverage loans and financing structures (up to 90% LTC, non-recourse) for clients acquiring value-add and core-plus deals nationwide. We’d like to use this opportunity to share with you some of the market intelligence we’ve gathered.

This financing can be sourced wholly from a single source, debt fund underwriting to a CLO execution, or by placing a senior loan plus mezz/pref equity. These capital sources are focused on business plan execution across all property types and are not constrained by bank leverage metrics, enabling them to fund loans to higher LTC’s.

 

Recent Assignment

In one recent assignment, Dekel Capital sourced 90% LTC non-recourse financing (Freddie Floating Rate Loan + Pref Equity) at a sub-6.0% blended rate, non-recourse and fixed for 5 years, for the acquisition of a 300-unit value-add multifamily deal on an underperforming class-B multifamily asset in Southern Florida.

New Capital in the Market: Mezz/Pref Equity for Core-Plus acquisitions

Furthermore, we recently spoke to a new fund that is focused deploying preferred equity or mezz debt (up to 90% LTC) for the acquisition of core-plus (8-11% leveraged IRR) projects in major metropolitan markets. This program is well suited for underperforming properties with either near term lease roll, above market vacancy, significant deferred maintenance, or repositioning. This capital is highly motivated to fund urban/in-fill retail acquisitions.

 

Underwriting Parameters:

  • LTC             Up to 90%
  • Amount      $4M and up
  • Pricing        10-14% All-In Yield, current pay plus accrual including origination fees
  • Term           Up to 5 years
  • Target         Office, Retail, Industrial, Multifamily

 

If you are working on a transaction that would benefit from these types of financings please to contact us for a confidential discussion.